Correlation Between Vinci Corporate and Energisa

Can any of the company-specific risk be diversified away by investing in both Vinci Corporate and Energisa at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Vinci Corporate and Energisa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vinci Corporate Fundo and Energisa SA, you can compare the effects of market volatilities on Vinci Corporate and Energisa and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Vinci Corporate with a short position of Energisa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vinci Corporate and Energisa.

Diversification Opportunities for Vinci Corporate and Energisa

0.35

Correlation Coefficient

Vinci Corporate  Energisa

Weak diversification

The 3 months correlation between Vinci and Energisa is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Vinci Corporate Fundo and Energisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energisa SA and Vinci Corporate is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Vinci Corporate Fundo are associated (or correlated) with Energisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energisa SA has no effect on the direction of Vinci Corporate i.e., Vinci Corporate and Energisa go up and down completely randomly.

Pair Corralation between Vinci Corporate and Energisa

Assuming the 90 days trading horizon Vinci Corporate Fundo is expected to under-perform the Energisa. In addition to that, Vinci Corporate is 1.45 times more volatile than Energisa SA. It trades about -0.03 of its total potential returns per unit of risk. Energisa SA is currently generating about 0.0 per unit of volatility. If you would invest  3,980  in Energisa SA on October 11, 2024 and sell it today you would lose (300.00) from holding Energisa SA or give up 7.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Vinci Corporate Fundo  vs.  Energisa SA

Vinci Corporate Fundo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vinci Corporate Fundo has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Vinci Corporate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Energisa SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energisa SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Vinci Corporate and Energisa

The main advantage of trading using opposite Vinci Corporate and Energisa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vinci Corporate position performs unexpectedly, Energisa can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Energisa will offset losses from the drop in Energisa's long position.

The idea behind Vinci Corporate Fundo and Energisa SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.